Last updated 28 April 2023
ISG
ISG was formed in 1989, when director David King led a buy-out of fit-out business at property company Stanhope. That business became Interior Services Group (ISG), which floated on the stock exchange and expanded in the UK and into continental Europe, the Middle East and Asia.
In 2016, ISG was taken off the stock exchange after being acquired for £84 million by Cathexis UK Holdings. The company turns over more than £2 billion and employs in excess of 3,000 people in seven countries.
Financials
Revenue at ISG in 2022 slipped to £2,185.1 million (2021: £ 2,263.7 million) and earnings at an underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) level slumped to £36.9 million (2021: £43.4 million). Profits before tax fell to £11.5 million (2021: £18.5 million).
To view the financials for ISG Plc, visit Companies House and use Company ID 10081578.
Operations
ISG’s UK operations are split into three geographic regions: and provide services in fit-out, construction, engineering and the retail and Realys operation. These businesses operate across the office, technology, science & health, retail, hospitality & leisure, education and public sectors.
The main divisions are construction and fit-out.
UK Construction
Historically, ISG expanded in the UK through acquisitions, including buying Totty Construction in 2006, Interior Alpha for £13.5 million, and Pearce for up to £22 million. The UK Construction division, which includes subsidiaries such as Jackson and Totty, works as a regional contractor and traditionally provided the bulk of revenue.
ISG works regionally and on large schemes in London clients ranging from major developers such as Blackstone, Legal & General and Yondr to local authorities in East Lindsay and Southwark and for many government departments, such as the Ministry of Justice. ISG is also on a number of major public sector frameworks, such as the £4.5 billion Southern Construction Framework 5 (SCF5) (Project ID: 22103071). In 2021, Construction turnover was static at £1,196.4 million (2021: £1,196.9 million) but profits at an EBITDA level edged up to £4.8 million (2021: £3.9 million).
Fit-Out
ISG’s UK fit-out & Engineering arm works for a wide range of clients from private firms such as Evenacre to local authorities such as Manchester City Council. In 2016, ISG set up a rapid response fit-out business called Agility. ISG works for many of the UK’s leading retail clients including Marks & Spencer and Wm Morrison and has a strong presence in the banking sector, where clients include Barclays Bank, Nationwide and Royal Bank of Scotland.
Overall global fit-out revenue at an underlying level in 2022 fell back to £988.7 million (2021: £1,030.0 million) and profits at an EBITDA level recovered to dropped to £32.1 million (2021: £36.5 million).
Glenigan Data
Glenigan’s data shows that in the 12 months to Q1 2023, ISG’s UK order book firmed at £1,576.9 million (2022: £1,568.6 (2022: £1,034.8 million) and the group was ranked sixth in Glenigan’s annual ranking of the UK’s top 50 contractors (2022: Third). More than 99% of this work was classified as building-related and the balance was civil engineering (2022: 99% building-related).
ISG is amongst the top 10 contractors in seven regions of the UK’s 12 economic regions. The largest regional exposure is in the South East, where orders totalling £485 million secured top spot. In London, ISG’s latest order book has reduced to £344.0 million and the group is ranked ninth. The North East provided orders totalling £215.7 million, ranking ISG in second spot, while in the North West orders were smaller at £96.2 million and the group was ninth.
In the South West, ISG was ranked fourth with an order book of £135.3 million. In the East of England, ISG is ranked tenth with orders totalling £96.5 million. Outside England ISG does not operate in Northern Ireland was ninth in Wales with orders worth £62.5 million.
Conclusion: Slowing?
After revenue passed the £1 billion mark for the first time in 2011, ISG’s turnover flat-lined then more than doubled but this growth has slowed as the group emerged from the worst impact of the coronavirus pandemic. The group’s own data for its order book shows a record level of £1.9 billion (2021: £1.6 billion) but profitability has suffered and Glenigan’s data shows ISG’s order book is flat in the 12 months to Q1 2023.
As rivals have picked up market share, ISG has slipped slightly down Glenigan’s rankings of the industry’s Top 50 contractors and has sustained its order book through taking on larger schemes, such as the £200 million Project Borealis in Billingham (Project ID: 22310324), the £400 million Slough one Data Campus (Project ID: 21161150) and the £600m Sunset Waltham Cross Studios development in Broxbourne, Hertfordshire (Project ID: 21355481).
This has increased the risk profile as the larger projects tend to be inherently more risky. The value of the average contract won by ISG has leapt by 48% over the past two years to above pre-pandemic levels. In this latest period, the average contract won by ISG was valued by Glenigan at £23.2 million (2022: £20.4 million).
The reliance on the UK and, according to Glenigan’s data London in particular, has reduced. In the 12 months to Q1 2023, the order book in the capital had more than halved and 22% of turnover was derived from London (2022: 56%). The regional exposure has increased and ISG is ranked among Glenigan’s Top 10 contractors by orders in seven regions compared to just four in the 12 months to Q1 2022 and just two regions a year earlier.
The UK continues to provide the largest proportion of turnover with revenue of £1,840.7 million (2021: £1,799.7 million) ahead of Spain on £105.0 million (2021: £117.3 million) and Germany on £73.8 million (2021: £127.9 million). Revenue in the United Arab Emirates fell back to £45.5 million (2021: £49.8 million) but increased to £33.5 million in Singapore (2021: £32.3 million). The remaining revenue originates in Belgium and the Netherlands.
Despite overall turnover falling, the workforce has increased. In 2022, the average number of employees grew to 3,079 people (2021: 2,982 people). This pushed the wage bill up to £225.8 million (2021: £220.9 million). Net cash has consequently shrunk to £104.7 million (2021: £119.9 million)
Going forward, structural changes in the UK retail sector were already posing problems before the onslaught on the High Street caused by the virus, while weakness in the capital has clearly caused problems and the reduction in orders suggests this will continue.
Abroad, a rebound in work in Asia and Middle East has been slower to materialise, while European revenue has suffered. The impact of Brexit – from a workload perspective but also on the cost of materials – is also being felt in the UK, but ISG expansion across the UK provinces suggest that the group looks well placed to remain amongst the UK’s top 10 contractors.
Winning Work With ISG
ISG operates its prequalification system using a series of vendor managers and systems coordinators at different trading subsidiaries. These vendor managers and systems coordinators are used to coordinate the online approval process for sub-contractors, provide assistance and liaise with sub-contractors and internal teams.
Details on ISG”s supply chain can be found here. ISG also works with the Supply Chain School and details can be found here.
Key ISG procurement contacts include:
ISG group head of supply chain – Robert Scriven, tel: 020-7247-1717
ISG commercial director – Alex McHugh, tel: 020-7247-1717